American Airlines Group (NASDAQ:AAL) to Make a New Frequent Flyer Program

In the airline industry, programs for frequent flyers have become very common and popular. However, the policies in the industry are not consistent. American Airlines and U.S. Airways have formed a merger by the name of American Airlines Group (NASDAQ:AAL). The combined company now needs to make a single program for frequent flyers. According to the details of the plan that have been revealed, the plan is quite different from that of United Continental Holdings (NYSE:UAL) and Delta Air Lines (NYSE:DAL).

Usually, programs for frequent flyers award miles to the flyers. These are based on the number of miles that the passenger flies. From next year, Delta Air Lines (NYSE:DAL) are changing this policy; the number of awarded miles will be based upon the money spent by the flyer and his status in the airline. United Continental Holdings (NYSE:UAL) will also be following the same policy as that of Delta Air Lines (NYSE:DAL) for their frequent-flyer program.

The two companies want to award their passengers based on the amount of money that they spend, not the amount of time. There are passengers who used to increase the number of miles travelled to acquire the frequent flyer programs so that they could travel longer distances at cheaper rates. Such passengers will be disappointed but the air line companies are focusing on their high-paying and high-status customers.

Now the question is that whether the American Airlines Group (NASDAQ:AAL) will follow suit? American Airlines’ frequent flyer program was called “AAdvantage” while that of U.S. Airways is “Dividend Miles”. However, the plan of the combined company did not mention deviating from the old policy of awarding miles based on the miles flown by passengers.

The new, combined company has not declared that they are ruling out the possibility of switching to the new policy. The combination of AAdvantage and Dividend Miles will be a goos opportunity to announce the change of policy as well. However, the investors want American Airlines Group (NASDAQ:AAL) to make sure that whether they are attracting bargain-hunting frequent flyers or benefitting the overall company.

The merger American Airlines Group (NASDAQ:AAL) requires that the frequent-flyer plans of each merging company be fully integrated into each other. The goal of the merger is to integrate the new company under the name of the American Airlines. Hence, the plan for the combined company will be called AAdvantage. However, besides awarding miles, there are many aspects of the frequent flyer plans that need to be considered. For example, the status levels of flyers and the qualification for these levels. Currently, there are three status levels for AAdvantage program, which are Gold, Executive Platinum and Platinum. Meanwhile, the Dividend Miles program has four levels which are Gold, Silver, Chairman’s Preferred and Platinum. These four status levels need to be integrated completely into the three status levels of AAdvantage program.

Similarly there are other complex factors that need to be considered in making the new frequent-flyer program. Flyers and investors must carefully watch the integration processes of the new company.